February 12, 2018

Breakingviews

By JENNIFER SABA

Comcast may be the spoiler in a Disney-Fox show. The cable firm is considering whether to try to thwart the Mouse House’s $52.4 billion purchase of parts of Rupert Murdoch’s empire. The story has many moving parts, and the Walt Disney Company may yet have to raise its game.

Comcast, led by Brian Roberts, initially bid around $60 billion when Mr. Murdoch first indicated that he was willing to part with cable networks like National Geographic and FX, movie studios, and Fox’s businesses outside the United States. Disney clinched the deal in December with an all-stock offer that was about 15 percent less than what Comcast had put on the table.

Regulatory concerns might have been a reason for Fox to take the lower offer. A tie-up with Comcast would look a lot like AT&T’s $85 billion acquisition of Time Warner, which the Department of Justice sued to block. That said, watchdogs may yet take a dim view of Disney’s plans too. Folding in Fox’s film assets would reduce six large movie-studio players to five. And it’s unclear how regulators will handle Disney’s purchase of Fox’s stake in their jointly owned video-streaming service, Hulu. Comcast, a third partner in Hulu, had to cede influence in the venture for seven years to be able to buy NBCUniversal.

Antitrust concerns may, in any case, be a fig leaf. Fox’s fate depends on what best suits the Murdoch family, which controls 21st Century Fox with nearly 40 percent of the voting shares. It has more chance of making its influence felt at an enlarged Disney than at Comcast, where a dual share structure firmly entrenches the Roberts family. Disney is also considering whether Mr. Murdoch’s son James will have a role in the company.

If AT&T wins its case, Comcast has every reason to try its own offer again. If AT&T doesn’t, Comcast might go for Fox’s international assets like its European pay-TV operator, Sky. As for Disney, it might want to think about how much more firepower it has at its disposal, in case the Fox bid saga moves into a tense second season.

Jennifer Saba is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.